This is Matt Reustle and today we are breaking down Cadence Design Systems. Cadence operates in the semiconductor ecosystem where they offer electronic design automation software - also known as EDA software - which is used for chip design. Putting that in much simpler terms - our phones now carry an entire 1980s Radio Shack inside them, and Cadence makes that possible with software to design smaller and more powerful chips.    To break down Cadence, I'm joined by two well-known tech investors and experts in the semiconductor space, Brinton Johns and Jon Bathgate of NZS Capital. We cover the value chain of semiconductors, the evolution of Cadence and the EDA market, and how Cadence reduced it's cyclical exposure over the last decade. I think some of the most interesting lessons come from businesses that face adversity and truly re-invent themselves with a micro-strategic change. Cadence is a prime example. Please enjoy this breakdown of Cadence.   For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.   -----   Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes.   Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here.   Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss   Show Notes [00:03:15] - [First question] - Everyday products that Cadence helps bring to life [00:07:28] - The rise of Cadence and the origins of the semiconductor industry  [00:10:26] - Major players in the semiconductor space back in the 80s  [00:12:13] - Going from plan, to chip, to production [00:16:58] - The life cycle of a chip and the cost to design one  [00:19:19] - Differences between software design and embedded software  [00:21:25] - The history of Cadence and the size and scope of their business today  [00:28:05] - Existing customer base and how diversified they are [00:30:55] - What a contract actually looks like between Cadence and a customer [00:35:05] - Protection, off-the-shelf IP blocks and custom IP  [00:35:53] - Cadence’s revenue growth, important metrics, and their KPIs [00:37:03] - How correlated their revenue is to semiconductor cycles [00:39:30] - Unit economics and the margin profile of the business [00:42:13] - Contributing factors to growth and thoughts on pricing [00:45:46] - Benefits of scale and what they like to see as investors from their R&D spend [00:48:12] - Risks and competitors that may threaten Cadence’s success [00:50:22] - Potential scenarios where the ecosystem becomes more vertically integrated [00:52:56] - What would drive a 10x growth for Cadence in next five years [00:54:58] - Things that would affect their growth in the next five years  [00:57:38] - Lessons for investors when studying Cadence [00:59:15] - How they navigated the pandemic and how it impacted their business

This is Matt Reustle, and today we’re breaking down Europe’s leading low-cost gym operator, Basic-Fit. Netherlands based Basic-Fit is a story of rapid expansion. Today, they operate over a 1000 clubs across 5 countries, and have 2 million combined members in their system.   To break down the business, I’m joined by Jonathan Abenaim from Arlen House Capital, who is an investor in Basic-Fit. We cover a history of fitness clubs dating back to the late 70’s and early 80’s, how low-cost gym models have emerged as winners and created a large addressable market, and we talk about how Basic-Fit is putting its own spin on a successful playbook from the US. Please enjoy this breakdown of Basic-Fit.   For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.   -----   Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes.   Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here.   Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss Show Notes [00:02:47] - [First question] - What it’s like to walk into a Basic-Fit gym [00:03:50] - Their footprint today in terms of geography, members and locations  [00:04:41] - The history of gyms in the US and differences between them and European ones [00:08:33] - Why US gym models lack influence and penetration in Europe [00:10:58] - The key insight that led to founding Basic-Fit  [00:13:40] - Economics of building and operating a gym in general and for Basic-Fit [00:16:47] - Typical churn for more established locations and their member demographic [00:20:33] - When Basic-Fit breaks even on a membership and how they battle churn [00:23:28] - Their cancellation policy and why they don’t leave for typical reasons [00:25:10] - Basic-Fit’s fortressing strategy and clustering philosophy [00:28:51] - Whether or not there’s data to support members using multiple gyms  [00:33:11] - The competitive landscape and whether other gyms adopt Basic-Fit’s strategy [00:35:21] - What drives country localizations for a particular gym chain [00:38:22] - Basic-Fit’s digital offering and at-home disruption from US brands  [00:42:31] - How they navigated the pandemic and if there’s any lasting changes [00:44:31] - The biggest threats to Basic-Fit over the next five years [00:46:23] - Major takeaways from studying Basic-Fit’s story